BOV links to Malita’s board raises eyebrows amid ongoing cash emergency

Both the CEO of Bank of Valletta (BOV) and a non-executive director who also chairs the bank’s Risk Committee have past and present ties to Malita Investments, the embattled state-backed company at the heart of the social housing scandal that is likely to receive rescue financing from BOV.

BOV’s CEO, Kenneth Farrugia, previously served as Malita’s Chairman between June 2011 – June 2022.

On his LinkedIn profile, Farrugia describes how the government had appointed him “to incorporate and set up Malita Investments”.

Robert Suban was appointed as one of BOV’s non-executive directors and Chair of its Risk Committee in May 2023.

Since April 2014, Suban has also been involved in Malita Investments, including as the Chair of its Audit Committee and as a member of its Investments Committee. He also heads the University of Malta’s department of Banking, Finance, and Investments.

When answering this newsroom’s questions about what measures, if any, were taken by Farrugia and Suban to address any perceived conflicts of interest given ongoing discussions about BOV’s rescue loan to Malita Investments, a spokesperson for the bank did not comment on the matter directly.

“As a matter of principle, Bank of Valletta does not comment on matters relating to third parties. This commitment applies in every instance and is central to our duty of confidentiality and market conduct,” the spokesperson said.

“Separately, the Bank operates under a comprehensive governance and conflicts-of-interest framework that applies to directors, senior management, and employees across the Group,” the spokesperson added. The spokesperson did not disclose a copy of these guidelines, classifying them as internal documents.

However, the spokesperson did point towards the general principles that BOV directors are obliged to follow, which are highlighted in the bank’s annual financial report.

“Directors are obliged to perform their duties conscientiously and will not put themselves in a position in which their private interests or the private interests of their family members, friends or associates might be in actual, potential or perceived conflict with the interest of the Bank Of Valletta,” the report reads.

“Should a perceived, potential or actual conflict arise during the tenure of a directorship, a Director must disclose and record the conflict in full and on time to the Board and subsequent reporting to the Compliance Department is required. A Director shall not participate in a discussion concerning matters in which s/he has a conflict of interest unless the Board finds no objection to the presence of such Director. In any event, the Director shall refrain from voting on the matter,” the report adds.

Following a series of embarrassing delays in major social housing projects due to a liquidity crisis, Malita Investments recently announced a potential financial lifeline.

While the majority government owned investment company did not publicly disclose who it is currently negotiating with, Finance Ministry sources told The Shift that BOV may issue a rescue loan running into millions of euros.

Housing Minister Roderick Galdes, who assumed responsibility for Malita Investments in 2024, has been the subject of widespread calls for his resignation after Malita ran out of cash and was forced to publicly admit three of its biggest projects were stalled as a result.

Though its biggest project in Luqa was backed by a €22 million loan from the European Investment Bank (EIB), Malita failed to explain why it did not ask for the loan to be disbursed, raising questions about whether Malita is in a position to satisfy the EIB’s typically stringent loan criteria.

Galdes continues to refuse to publish the resignation letter of Malita’s former Chairman, Johan Farrugia, who resigned shortly after his predecessor, former Labour MEP Marlene Mizzi, publicly accused the Housing Minister of “hobnobbing with contractors” and interfering in the company’s administration.

Though the embattled Housing Minister dismissed all allegations of wrongdoing, investigations exposed significant overlap between the ministry’s accommodation projects and the minister’s private business dealings with developer Joseph Portelli.